Maharashtra govt may discuss VAT, fuel prices in April 28 cabinet meeting

The Maharashtra government may discuss the twin issues of Value Added Tax (VAT) and fuel prices in the state cabinet meeting scheduled for Thursday, a senior minister said on Wednesday. Notably, during his virtual interaction with chief ministers of various states on Wednesday, Prime Minister Narendra Modi flagged higher fuel prices in many opposition-ruled states and urged them to reduce VAT in "national interest" to benefit the common man and work in the spirit of cooperative federalism in this time of global crisis.

The senior minister said that Maharashtra's share in VAT on petrol is marginally higher than that of the Centre, and this issue would be discussed in the cabinet meeting.

The government rescheduled the state cabinet meeting, which was supposed to be held on Wednesday, to Thursday due to the PM's virtual interaction with the chief minister.


After the virtual meeting, Chief Minister Uddhav Thackeray's office issued a statement detailing the Centre and the state government's share of taxes charged on fuel - mainly petrol and diesel.

The CMO stated that the Centre gets Rs 24.38 on a litre of diesel sold in Mumbai, while the state receives Rs 22.37. The same share of a litre of petrol sold in Mumbai is Rs 31.58 and Rs 32.55, respectively.

"It is not correct that prices of petrol and diesel are going up because of the state government's VAT," Thackeray stated.

The CM pointed out that Maharashtra's (VAT) share on petrol is 97 paise higher than the Centre.

"To match the Union government's tax share, Maharashtra may bring down VAT on fuel by 97 paise (per litre). However, such decisions have to be discussed in Cabinet meetings and the final approval comes from the chief minister. We may discuss the fuel price issue in the state cabinet meeting," the senior minister said.

He has asked his ministry's staff to include a note regarding the prices of petrol and diesel and the taxes imposed by the state and Union governments in the note for Thursday's cabinet meeting.

Maharashtra is a huge state in terms of the number of state employees and their salaries and pension are concerned. It takes a large share of the state's earnings just to pay the monthly salaries and pension, he said.

A state finance department official said that Maharashtra's annual earnings are Rs 4 lakh crore of which Rs 1.5 lakh crore are spent on paying salaries and pension of the state employees.

Around 14 lakh employees are working either in various departments of the Maharashtra government or in semi-state departments.

According to the official, 7.50 lakh people get monthly pensions under the old pension scheme which also puts a huge burden on the state's finances.